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Russul Corp. v. Zim American Integrated Shipping Services Co.

October 5, 2009


The opinion of the court was delivered by: James C. Francis IV United States Magistrate Judge



Russul Corporation ("Russul") has sued Zim American Integrated Shipping Services Company, Inc. ("Zim"), a vessel-operating common carrier, for damages as a result of Zim's premature shipment of used cars on behalf of Russul. Zim initiated the shipment prior to receiving required customs documents, leading to seizure of the cars by U.S. Customs and Border Protection. The parties consented to proceed before me for all purposes pursuant to 28 U.S.C. § 636(c), and a bench trial was held on June 22, 2009. In its post-trial submission, the defendant argues, among other things, that the plaintiff's action is time-barred under the relevant statute of limitations. For the reasons that follow, this case is dismissed as untimely.


Zim became the shipper for the plaintiff through Russul's agent, Eurocargo Express ("Eurocargo").*fn1 Eurocargo did business with Zim on a regular basis; they had worked together on more than 40 shipments (Tr. at 84-85)*fn2 and had an ongoing service contract. (Tr. 85; Def. Exh. 14).*fn3

In December 2003, Russul hired Eurocargo to arrange the shipment of four used cars from Long Beach, California to Novorossiysk, Russia, on the way to their ultimate destination in Kazakhstan. Russul Corp. v. Zim American Integrated Shipping Services Co., No. CV 05-04211, at 2 (C.D. Cal. Dec. 22, 2005) (unpublished decision) ("Transfer Order").*fn4 Eurocargo then contacted Zim to book space on one of its vessels. (Transfer Order at 2; Pl. Exh. A). On December 15, 2003, Eurocargo delivered the cars in a single container and Zim took "custody and control of it." (Transfer Order at 2; Tr. at 100).

There was an understanding between Eurocargo and Zim that the cargo was not to be loaded onto the shipping vessel until Zim had received the necessary U.S. Customs and Border Protection ("Customs") export documentation from Eurocargo. (Pl. Exh. A; Tr. at 23-24, 94). Eurocargo, acting on behalf of Russul, agreed to pay Zim a fee to "roll [the cargo] over to the next vessel," because the export documentation was not ready in time for the originally reserved shipping date. (Tr. at 26; Pl. Exh. B).

Despite this arrangement, on December 23, 2003, Russul's cars were loaded onto one of Zim's vessels before the titles for the cars had been "validated and approved by [] Customs." (Tr. at 101; Def. Exh. 11). On January 6, 2004, Eurocargo contacted Zim for additional information needed in connection with obtaining clearance from Customs, which was then still pending. Russul Corp. v. Zim American Integrated Shipping Services Co., No. 06 Civ. 0037, 2009 WL 466149, at *2 (S.D.N.Y. Feb. 23, 2009). At some point that day, Eurocargo first learned that the cars had already been shipped. Id. When Customs was contacted soon thereafter, it ordered that the cars be returned to the United States. Id. Zim rerouted the cars to Long Beach, California, where on February 12, 2004, they were seized by Customs and ultimately sold at auction. Id. Russul was officially notified of the seizure by Customs through a letter, stamped April 5, 2004, addressed to Yuri Mazourenko of West Hills Motor Cars ("West Hills"), the original owner of the used cars and the client of Russul and Eurocargo in this transaction. (Pl. Exh. D; Tr. at 58-59, 112-13; Def. Exh. 8).

On December 23, 2003, Zim had prepared an ocean bill of lading to memorialize its arrangement with Eurocargo (the "Bill of Lading"). Russul, 2009 WL 466149, at *1. The parties agree that neither Russul nor Eurocargo ever received the Bill of Lading from Zim for review and approval for this particular shipment. (Tr. at 29, 96). It is also undisputed that Eurocargo was, at the time, fully familiar with Zim's standard bill of lading. Russul, 2009 WL 466149, at *2. Russul "does not dispute that the unissued [Bill of Lading] . . . was the standard [bill of lading] Zim issued in the ordinary course of business." (Transfer Order at 6). Neither does Russul assert that, had it been offered the opportunity to review the Bill of Lading, it would have refused to accept the standard terms and conditions. (Transfer Order at 6; Tr. at 70-73). The standard bill of lading incorporates the U.S. Carriage of Goods by Sea Act ("COGSA"), 46 U.S.C. § 1300 et seq.,*fn5 as setting the terms of Zim's liability during the period of time that the goods are under Zim's custody or control. (Def. Exh. 15).

Russul filed suit in California state court on May 4, 2005, alleging that Zim's failure to adhere to Eurocargo's instructions to hold the cargo until it had been cleared for shipment constituted a breach of its common law and statutory duties as a common carrier. (Compl., ¶¶ 13, 17, 20). Russul sought damages of not less than $80,000.*fn6 (Compl., ¶ 24). Zim removed the action to the United States District Court for the Central District of California in June 2005. Shortly thereafter, Zim moved to dismiss the action on grounds of untimeliness and improper venue.

On December 22, 2005, United States District Judge Nora M. Manella found the forum selection clause in the Bill of Lading applicable and transferred the case to this district. (Transfer Order at 7-8). Judge Manella noted that "[b]ecause this court finds [] that any action should have been brought in the Southern District of New York, it need not -- and does not -- reach the statute of limitations issue." (Transfer Order at 4). Discussion

A. Applicability of COGSA

Before determining whether this case was filed within the applicable statute of limitations, I must first determine whether COGSA --- and, accordingly, its statute of limitations --- applies. Under either of two theories, it does. First, COGSA, by its own terms, governs the contract at issue. Furthermore, the District Court in California already found that the Bill of Lading, which ...

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